Friday, 5 September 2008

DAVID Mills wants Queensland's resources sector to have its day in the sun. The Australian solar energy pioneer is keen to build the country's first large-scale solar thermal power plant using technology his California-based company, Ausra, has developed. "The technology is really ready to go and were hoping we can actually get grants to do some big things in Queensland," he says.

"We're talking to mining companies about how we can create a system around the technology, which will probably change the way they mine minerals. Maybe there will be an emphasis on more mining during the day and less at night." Apart from that, Dr Mills says the plant process is fairly straightforward and has the added advantage of being able to function even when the sun goes down.

"What we are increasingly moving to is thermal storage, which allows 24-hour power," he says. "Our technology is best in the desert and fairly arid regions... but its quite possible for modern technology to transfer the power from say the southwest of the US to the northeast now with less than 10 per cent loss." Dr Mills, who developed the technology in Australia, but was forced to relocate to the US to find funding, believes the move away from coal has swung into high gear.

But despite being one of the better funded start-ups in the US Ausra recently secured a further $US24.5 million ($A28 million) from two Californian firms bringing their total investment to $100 million he says its still an uneven playing field for clean energy companies. "Special measures by the Government to assist the technology just to get off the ground are needed," he says.

But Ausra is not the only solar project competing for funding in Australia. Engineering giant WorleyParsons recently announced plans to build up to 34 solar plants using parabolic troughs by 2020. The first plant scheduled for Australia is likely to be located in the Pilbara and with a capacity of 250 megawatts will be one of the world's largest.

A consortium of companies including BHP Billiton, Rio Tinto, Forteseue Metals, Woodside Petroleum and Picture: Nathan Richter Wesfarmers, have joined WorleyParsons in the feasibility study, but they are unlikely to partner up in a venture to build the infrastructure, according to WorleyParsons renewable energy expert Peter Meurs.

While parabolic troughs have been around for decades and are already operated by a variety of companies overseas, Climate Positivesolar energy expert Matthew Wright says Ausra's technology and more basic design will yield significant cost savings. WorleyParsons says that to improve its chances of attracting capital, it has chosen to pay a premium for a model its bankers will perceive as less risky because it is already viable.

USING just 1 per cent of Australia's so-called "hot rocks" supply could produce 26,000 times the amount of energy that is now used each year. The figures, compiled by Geoscience Australia, were such a surprise to the office of the Minister for Resources, Martin Ferguson, that staff had them checked six times before releasing them. "The potential of the geothermal industry in Australia is truly staggering. .. It provides clean baseload power and is potentially a very important contributor to Australia's energy mix in a carbon-constrained world," Mr Ferguson said.

Although its potential has been identified, the geothermal industry needs more funding to start large-scale production. At the first conference of the industry - which begins in Melbourne today - the Australian Geothermal Energy Association will release modelling showing it could produce 5 per cent of all of Australia's energy by 2020. That is likely to be a conservative estimate, the industry says, because the rate of research and production is growing quickly.

The research also shows geothermal energy has a great advantage over some other forms of renewable energy because it is able to produce baseload power, the type that can be produced 24 hours a day, seven days a week. The association's chief executive, Susan Jeanes, said people should feel confident about the need to find power sources other than coal as the world struggles to tackle the challenge of climate change.

"Over the next few years people will see the solutions and they will be less concerned about how we get there [reducing greenhouse gas emissions]," Ms Jeanes said. The cost of geothermal energy is likely to be expensive at first but would quickly drop by 2020, by which time it is projected to be the cheapest form of renewable energy. Sites in every state have been identified as having the potential for geothermal power stations, but most of the existing work is taking place in South Australia.

Geothermal energy is created when water is pumped as far as five kilometres below the surface and heated by the dry hot rocks underground. The heat is then used to generate electricity. The Federal Government is giving $50 million to the industry to help cover the cost of hiring the heavy drilling equipment needed to reach the layers of hot rock. The geothermal industry is keen to be considered as the Federal Government draws up the rules covering its target of having 20 per cent of energy come from environmentally renewable sources by 2020.

geothermal companies argue that some of the permits created by such a scheme need to be kept for later years so that they can use them. Unlike other technologies being investigated to tackle climate change, geothermal energy has already been proved at the research level. But it is not ready for large-scale commercialisation. "The industry is evolving rapidly, but it is not capable of deploying any capacity," the association says. "While it is established that there are resources at sufficiently high temperatures to generate electricity, it has not been demonstrated that these can be the basis of viable generation."

A BIG move to modernise the national electricity grid will be unveiled today as debate continues over what contribution renewable energy should make to Australia's needs. The CSIRO will team with five Australian universities in a multimillion-dollar effort to make the grid more capable of using renewable energy sources, including wind and solar.

The CSIRO's John Wright said the highly computerised network would be capable of accommodating thousands of tiny, decentralised generators, and use weather forecasting to moderate power flows. "The whole network will predict some hours ahead what supply can be expected and U what demand can be expected," Dr Wright said. "There will be huge information flows." Large, centralised coal-fired power stations now generate about 80% of electricity.

Meanwhile, the Clean Energy Council has criticised a move to wind back the Government's renewable energy target. The council said the Government's target of sourcing 20% of electricity from renewable sources by 2020 had already caused a flood of investment. Business organisations have criticised the target. The Australian Industry Group described it as "ill-advised and risky". The Productivity Commission has said the target would become counter-productive once emissions trading was introduced.

But Greens senator Christine Milne said the target was the Federal Government's only remaining scrap of credibility on climate change after it had compromised on the design of an emissions trading system. The debate has emerged as rival renewable technologies jockey for investment dollars.

A week after engineering company WorleyParsons said it planned to build a 250-megawattsolar thermal plant, geothermal energy company Petratherm said hot dry rock technology could compete with market-leading wind technology on price, as well as being more reliable. The company plans to generate its first commercial electricity in 2010 from a site in South Australia's northern Flinders Ranges.

A new electricity grid will be developed as part of a Labor plan to encourage development in the resource-rich Pilbara, Alan Carpenter will reveal in Karratha today. The Premier said the Pilbara energy project would make many smaller resource projects viable and encourage the development of downstream processing industries by removing the need for proponents to develop their own standalone power stations and providing a cheaper supply of power.

He said the North-West interconnected system would cater for the massive expansion in the iron ore industry, an increasing number of ports and population growth. A feasibility study into developing the grid had started and was being backed by major industry players, but Mr Carpenter said it was envisaged State utility Horizon would manage the network. "It will be a massive step forward in the development of the North- West of the State," he said. "If you have an integrated system it is much more cost-effective for everybody, it can be run by the State.

"It is cheaper for (industry) because they would have to do it themselves anyway and it allows all these other players to plug in who would otherwise not be able to afford to do it and it improves the facilities in the towns. This will be a huge step in the economy of the Pilbara." Mr Carpenter said gas and solar energy sources would dominate the system, which would also reduce greenhouse gas emissions and improve reliability of supplies.

WA was seeking money from the Federal Government's Infrastructure Australia fund, but Mr Carpenter said the public spending needed for the project was not yet known. It was "very possible" the project could be entirely funded by the private sector. The details, as well as a time frame for the plan, were being investigated as part of the feasibility study, which would report by the end of the year.

Thursday, 4 September 2008

The State election campaign has already produced its fair share of hot air but also possibly delayed news of which explorers have picked up hot rocks licences in WA. The Government's maiden geothermal acreage program has received 64 bids from nine parties for 38 of the 320sqkm blocks up for grabs. Winning bidders were to have been announced this month but, with August more than half gone, it remains unclear what is holding up the notifications.

The Government's focus on geothermal to complement traditional energy sources of coal and gas does not seem to have waned, given the Department of Industry and Resources only three weeks ago called for expressions of interest for stage two of the State-wide acreage release. The second round centred on the Pilbara and Gascoyne, following the maiden release which focused on acreage from Kalbarri to Dunsborough and 250km inland.

Geothermal energy, otherwise known as hot rocks, is an unknown in this State's resources sector. But the need to find alternative sources of energy supply, coupled with the prospect of heavy carbon taxes on hydrocarbon projects, is likely to catapult the search for hot rocks into as much prominence as it has received in South Australia.

There is also the matter of there only being a 2.5 per cent well head royalty demanded by the WA Government, compared to 10-12.5 per cent for hydrocarbons. It is a guessing game as to which junior applied for WA licences. Interestingly, one of the more active SA hot rocks hunters is the West Perth-based Torrens Energy, whose board includes former Western Power boss David Eiszele.

Torrens last month signed an alliance with AGL Energy, under which they plan to pursue geothermal baseload opportunities in SA close to the national electricity market. AGL also took a 9.9 per cent stake in Torrens priced at 40¢ a share. Torrens shares closed at 34¢ on Friday.

The hot rocks hunt focuses on geothermal prospects generating heat of at least 200C about 5km beneath the surface. Once found, water is injected into the hot rocks region where it is heated before being recovered through another well and used Electricity Production to drive an electricity turbine hooked up to the local grid. The used water is then reinjected into the closed-loop system.

It is simple in theory but likely to be complex in practice. But the high level of interest in WA acreage, in particular around the Dongara, Eneabba, Kwinana and Pinjarra areas, augurs well for WA's latest energy sub-sector. United Minerals Corp has boosted its senior management ranks as it works on plans to best commercialise its Pilbara iron ore assets.

The junior has poached Sten Soderstrom from the Sinosteel-Midwest Corp Weld Range joint venture and appointed him development manager for UMC's iron ore projects, notably Railway Prospect which has an inferred resource of 84.5 million tonnes grading 60.15 per cent.

UMC has made much of Railway's high grade and low impurities when compared to other juniors' ore bodies in the Pilbara, and is now looking at a host of options, including developing a 10 million tonne-a-year operation. Railway is close to BHP Billiton's railway, although another option would be to build a spur line to the Fortescue Metals Group link. Yet another option, of course, would be to sell Railway to the highest bidder.

CONVINCING state governments to abandon electricity price caps so consumers aren't shielded from the cost of a carbon-constrained economy is the biggest challenge confronting the introduction at the federal Government's emissions trading scheme, one of Australia's biggest energy companies has warned. Last night Origin Energy. which is facing a hostile takeover by BG Group. stepped up its campaign for state governments to scrap electricity price caps so that the increased cost of carbon would be passed on under the proposed scheme.

"The issue of cost pass through is among the most difficult confronting the Australian Government, because responsibility for price caps which continue to exist in states around Australia remains with the states," Origin Energy executive general manager, corporate development and communications. Carl McCamish said in a speech at the fourth annual Australia New Zealand Climate Change and Business Conference in Auckland yesterday.

"Providing certainty to investors about the processes that will deliver an effective national market in the long term remains key to the success of the Australian carbon market." Australian Power & Gas has previously warned that the interaction of the market based emissions trading scheme with the state price caps could see a repeat of the 2000 and 2001 Californian electricity crises, where soaring wholesale prices left energy retailers paying more than they were able to charge customers under price caps, which resulted in bankruptcies and costly public bail-outs of utilities.

Despite resistance to the move as consumers and small businesses digested the impact of rising interest rates and high oil prices, state governments signed a deal with the Commonwealth in 2000 through the Ministerial Council of Energy agreeing to scrap price caps on a state-by-state basis once the Australian Energy Market Commission agreed that there was enough competition between retailers.

Mr. McCamish, whose address comes ahead of today's public dialogue between Prime Ministers Kevin Rudd on his first visit to New Zealand and Helen Clark, said the Commonwealth must ensure the states avoided "proliferation of schemes in areas like energy efficiency and solar feedin tariffs which overlap across the states, often with different rules".

"These schemes add cost for companies but, more importantly, they add costs far consumers." Despite the push to ensure that price signals were passed on to consumers, Mr. MeCamish said households hardest hit by an emissions trading scheme should receive assistance. "This should take the form not just of direct measures. for example through the tax system, but also of energy efficiency programmes that will reduce energy bills in perpetuity." he said. "

This compensation will he paid for by emitters by the price we pay at auction for our permits.'' Mr. MeCamish said Origin Energy's operations in both Australia and New Zealand meant that the company was ''likely to bear one of the higher compliance burdens" in both countries and so welcomed the similarities between the schemes, including that they were both Kyoto compliant, included all six greenhouse gases and were both mandatory, broad-based cap-and-trade schemes which had non-compliance penalties. "At Origin Energy we strongly support the governments of both Australia and New Zealand and, I might say, the opposition parties in both countries in leading Australia towards lower emissions future." he said.

Despite concerns from some analysts that linking Australia to the New Zealand scheme could indirectly expose Australia to the European Union scheme. Mr. MeCamish said international linkages between Australia and New Zealand were "a very real possibility in the future, so long as the robustness of the two schemes is protected through establishing high standards in both schemes for measurement, compliance and verification".

Booz and CoETS specialist Rob Fowler said there was some merit to linking the Australian and New Zealand schemes. "It's probably a useful starting paint although the stance that New Zealand has taken about fully integrating its scheme with international carbon markets means Australia would be exposed to that price straight away," he said.

AS pressure builds on climate change, early adopters of green technology, and investors in it, are discovering new opportunities, leading chief financial officers told an SAS business forum in Sydney last week. Gillian Larkins, of Westpac's institutional banking unit, says the bank's embrace of carbon constraints more than 10 years ago has given it a strong advantage in the emerging emissions trading market.

In 1996, Westpac promised to reduce its direct carbon impacts by 40 per cent within 10 years. "Our early start means we're not facing the same compliance costs others in the sector are facing under the National Greenhouse and Energy Reporting Act," she says. "Instead, we're focusing on the commercial opportunities for us, rather than dealing with the compliance costs. "We're well positioned to make money from carbon markets, which is simply an extension of our energy trading business.

We have a solid understanding of the market and how to help our customers." In May, Westpac conducted the first trade under the coming Australian emissions trading scheme, buying 10,000 tonnes of carbon dioxide equivalent from AGL for delivery in early 2012 at a price of $19 per tonne. The trade set the first price for carbon in Australia.

Larkins says a company's carbon accounts will provide a strong indicator of sustainability, because "carbon has a direct financial impact" on long-term share performance. "Carbon is now on the balance sheet," she says. "The train has left the station on this and there will be severe repercussions for those who fail to see the inevitable coming.

"No one says it's easy, but carbon will have to be managed as just another business issue." PricewaterhouseCoopers chief financial officer Wayne Twomey says the partners' efforts to become carbon neutral within a year proved more difficult than expected. As Australia's largest professional services firm, with more than 5000 staff located in CBD offices nationwide, PwC knew its main environmental impact derived from buildings and travel. We understood what it meant to measure our carbon footprint, it was extremely difficult to get landlords to change their behaviour," Twomey says.

"We ended up spending the money ourselves to install sensors in offices, change our light bulbs and employ our own cleaners so we could recycle." PwC cut the power bill at its Sydney Darling Park premises by 20 per cent within 12 months using these simple measures; the cleaning bill dropped as desk bins were removed and staff were encouraged to recycle rubbish. A switch to double-sided printing cut paper consumption by about 35 per cent.

Some things cost more, Twomey warns. PwC moved buildings in Melbourne and Brisbane during the period and, unable to find what it wanted, became involved in building construction and fitout. The higher initial costs will deliver a long-term payback. "It was also a challenge convincing suppliers that we were serious about the carbon impact of production processes in our purchasing decisions," he says.

We made a conscious decision to pay more for more efficiently produced consumables, and to include the longterm carbon impact in equipment running costs." PwC had less success in reducing its business travel. Although an ambitious 30 per cent reduction in flights was targeted, only a 20 per cent cut was achieved. Freight behemoth TNT has a massive direct carbon footprint of 1000 kilotonnes annually, according to local financial director Stewart Cummins.

It then went further and calculated that suppliers and contractors contributed an additional 1000kt, while its employees and their families worldwide represented some two to three times the company's direct footprint. Cummins says TNT has instituted mandatory policies aimed at reducing greenhouse emissions at all its businesses.

Famously, TNT's global chief is a mate of Al Gore, and many years ago traded his Porsche for a Prius. Now the company's executives all drive hybrid or diesel cars, the 17,000 global truck fleet is being similarly converted, and TNT's 50 freight planes are being upgraded for greater fuel and carbon efficiency.

The company has also installed 54 videoconferencing units worldwide in a bid to clamp down on unnecessary business travel. Cummins warns that demand for green-friendly transportation has so far outstripped the capacity and vision of truck makers to switch. "TNT has the largest fleet of diesel electric vehicles in Australia we bought the whole production line from Japan of 10 vehicles last year, but we have 1500 trucks in our fleet," he says.

"So it's going to be some time before our suppliers can produce enough trucks to satisfy the demand." Cummins also warns that TNT's carbon footprint will not shrink; rather it will continue to grow in response to changing trade patterns. China now manufactures consumer products for the whole world, and its high-value exports are increasingly freighted by air instead of by sea.

Wednesday, 3 September 2008

Griffith University surveys have shown the rapid growth in demand for green power has exposed a yawning knowledge gap in Australia's ability to devise next-generation green power solutions. Launching Griffith's new Sustainable Energy Systems discipline, deputy head of Engineering at Griffith University associate Professor Steven O'Keefe said demand for new technology would intensify as the implications of accords such as the Kyoto Protocol began to bite.

"Governments worldwide are offering cash incentives to households and businesses to install technologies that reduce consumption or generate power, so there's a real niche for engineers with electronics knowledge to develop these," Prof. O'Keefe said. Prof. O'Keefe said universities needed to engage technology focused students to grasp the challenge of developing and using these technologies that would provide the energy solutions to keep modern society powered, while also caring for the environment.

He said to engage these students, Griffith had developed the Sustainable Energy Systems program based on an electronics engineering degree, enhanced with specialist courses covering renewable energy generation, power storage and distribution, and efficient energy consumption. "TAFE has been filling the gap at a practical level by training installers, further highlighting the gap in university offerings at design and development level," Prof. O'Keefe said.

"Our research shows a lack of university degrees focused on the technical aspects of solar and wind generation, energy auditing and most importantly, on reducing consumption." He said jobs growth would likely come from traditional and green energy generators and power distribution companies.

THE state's top 232 greenhouse polluters, ranging from BlueScope Steel Steel to the Sydney Opera House, will be forced to cut their emissions from this year under new energy-efficiency laws. The State Government will pursue a naming and shaming policy for big energy users it deems to be wasting power, backed up by court action if they do not make the required cuts.

But the targets so far are modest. The first round, beginning in January, aim to peel back less than 1 per cent of the state's emissions of at least 160 million tonnes of greenhouse gas each year. The first round of efficiency measures will save companies about $40 million on their power bills, the Government says.

Yesterday the Environment Minister, Verity Firth, held the first meeting of her Climate Change Council, a group of climate experts and advocates. In a speech she acknowledged that most of the work remained to be done, and the national carbon trading scheme, to be introduced in 2010, would not do enough to bring down emissions. "The lack of an effective framework for adaption in NSW is a major gap in the state's response to climate change," she said.

NSW had fallen behind some other places, such as California, Ms Firth said. That US state had promoted energy-efficiency programs that saw household power use rise by just 6 per cent since 1980; electricity consumption by NSW residents had shot up 64 per cent in the same period. If NSW had followed the Californian path, household energy bills would be lower by about $115 a year, she said.

Details of how far businesses have to go to cut power are still being decided, although under the scheme Telstra aims to snip emissions from its NSW operations by 5893 tonnes of carbon dioxide equivalent a year, through simple measures such as switching off lights when not in use.

Flemington Markets will improve its refrigeration and lighting practices to preserve 1185 tonnes, and the Sydney Convention Centre will reduce annual energy use by 510 tonnes with better lighting and air-conditioning. "The sorts of cost savings they can make in their own operations should be enough, but there will be mechanisms to follow up if for some reason they do not comply," Ms Firth said.

Small- and medium-sized businesses would also be encouraged to make cuts under the state plan. On the same day Ms Firth was promoting the benefits of reducing the state's reliance on coalfired power, her counterpart in the Energy Resources portfolio, Ian Macdonald, announced that another coal exploration licence had been awarded.

China's biggest coal-mining company, the state-owned Shenhua Group, will pay the state $300 million for the right to search for coal on 190 square kilometres of the Liverpool Plains, near Gunnedah. The area adjoins another coal exploration zone, where farmers are continuing a blockade to stop coal prospecting by BHP Billiton, which had also made a bid for the licence awarded to Shenhua.

Australia should begin replacing older coal-fired power stations with new solar thermal technology to cut greenhouse emissions and meet rising energy demands, a leading scientist says. Former Sydney Universitysolar energy researcher Professor David Mills has also urged the Rudd Government to commit itself to "big, inspirational" renewable energy projects that would make Australia a global centre of clean energy.

"We can definitely be a world leader in this field. The investment is out there, but the political will has to be manifest, and committing to several large-scale projects would demonstrate the Government's confidence in a clean energy future," Professor Mills said. He said Australia's political climate in respect of the future role of solar energy had changed since last year's federal election, with governments finally beginning to grasp the potential of solar thermal electricity to power the nation.

"I think people are finally getting it. solar thermal can provide electricity on a large scale. It can carry the power needs of our entire society and, once the investment is there, we have the resources and expertise to build solar energy plants within months." In order to move more rapidly to zero-carbon electricity generation, the Federal Government had to establish an economic value for clean energy to encouragement greater investment.

"We are not talking about a subsidy but a shift in expenditure to drive expansion." Professor Mills, who met Queensland Premier Anna Bligh yesterday to discuss the feasibility of future solar thermal projects for the state, left Australia in February last year after failing to attract support from the Howard government for his world-beating technology.

Now based in California, his company, Ausra Inc, has attracted backing from leading venture capital firms and signed major agreements with US energy providers. It recently open the US's first solar thermal power manufacturing plant, capable of producing over 700 megawatts of solar collectors a year.

Solar thermal power plants use fields of mirrors to capture the sun's rays and thereby produce zero carbon electricity. They are estimated to become cost competitive with coal-fired power in less than five years. The collectors can also store energy to continue supplying power at night and during overcast weather. Dr Mills said demand for his company's technology was growing in the US, Germany and the Middle East, and was now being "swamped" with business inquiries from Australia.

A city the size of Canberra could easily switch to solar thermal energy, provided there was sufficient flat land on which to build the solar arrays. The Ausra technology uses mirrors to focus sunlight on to water pipes, and the resulting steam drives a turbine to generate electricity. But the Australian technology is in such demand that there could be a three-year delay in turbine delivery. "We can't build them fast enough. If we can sort that out, then we can build a solar thermal plant within four months and have it operational."

TWO wind generators will be built to provide electricity to the Millicent High School. They will make its agricultural science block carbon neutral. The infrastructure will be built through a $5000 community grant from SGIC. Principal John Shelton said staff and students always were on the lookout for ways to improve the school's environmental credentials. Glencoe Central Primary School has received a $1420 grant for its "Chook Project", which teaches environmental practices.